What is a Caregiver Contract and how can it be beneficial?

A caregiver contract is an agreement that ensures that caregivers are protected and the family members who are involved in elder care fully understand all expectations and responsibilities of the caregiver. A caregiver contract may also be referred to as a personal care agreement.

Millions of Americans are currently caring for an elderly family member or friend at home, and receive regular compensation. Depending on the circumstances, however, it may actually be beneficial for both parties to enter into a care contract wherein the caregiver accepts payments for the care that they are providing. A care contract also allows the caregiver to formally assume responsibility for that care.

For example, if the loved one that you are caring for reaches a point where nursing home placement is the only option, all of their money will be considered available to pay for their care at a nursing home and they will not be eligible for Medicaid assistance until all their assets have been depleted. Certainly, the care you provided while they remained in the community, is just as valuable to them and worthy of payment as what will be provided in the nursing home. With a Care Contract in place, the caregiver can be paid going forward and every penny spent will count towards their “Medicaid spend down” should they apply for benefits.

Having a Care Contract in place also ensures Medicaid will not impose those penalties on the money received by the caregiver. Sometimes an elderly person will randomly give sums of money to their caregiver as past payment for the care they provide. Without a contract in place, Medicaid will assume the money transferred is a “gift” or a “transfer of assets” and will impose penalties resulting in the ineligibility for Medicaid benefits.

From a caregiver’s perspective, although they are willing to provide services for free, it is often difficult for them when, at the time of the loved one’s passing, the caregiver who has provided years of service, receives the same inheritance as the other heirs, many of whom have not been involved in caring for the loved one. On the flip side, if a caregiver is receiving payment and there is no contract in place, the other heirs may be upset by the additional monies the caregiver received.

The bottom line is this: if you are caring for a loved one or receiving care from a loved one, a care contract is a good idea for both parties involved, for multiple reasons. But, before entering into such a contract, be sure to contact someone experienced in drafting such contracts and knowledgeable with respect to their effect on Medicaid qualifications.

Also, if you are the child who has been caring for your parent for over two (2) years, there is another Medicaid planning technique that may be available which would allow your parents to transfer their home to your without incurring Medicaid penalties. This is not true in all cases, but if you and your parent(s) meet certain criteria, the exemption known as the “Caretaker Child Exemption” could be a way to ensures their home stays in the family. If you need to discuss these options, please call our office at 508-690-4228.